Publication - Correspondence

Block grant adjustments from the UK Spring Forecast 2025: letter to finance and social security committees

Published: 7 April 2025
From: Cabinet Secretary for Finance and Local Government
Directorate: Exchequer Strategy Directorate
Topic: Money and tax

Letter from the Cabinet Secretary for Finance and Local Government to the Finance and Public Administration Committee and Social Justice and Social Security Committee about block grant adjustments (BGAs) from the UK Spring Forecast 2025, and publication date for the Scotland Act Implementation Report 2025.

To: Finance and Public Administration Committee and Social Justice and Social Security Committee
From: Shona Robison MSP, Cabinet Secretary for Finance and Local Government

4 April 2025

Dear Kenneth and Collette

I’m writing to update on two areas of interest for your committees; the block grant adjustments (BGAs) agreed at the Spring Forecast 2025 and the publication date for the Scotland Act Implementation Report.

Spring Forecast BGAs

The Office for Budget Responsibility (OBR) published updated UK Government tax revenue and social security benefits expenditure forecasts on 26 March 2025. HMT have used these forecasts to calculate updated BGA estimates for the Scottish Budget 2025-26 and later years. Table A in the annex to this letter outlines the BGAs for Income Tax, Land and Buildings Transaction Tax (LBTT), Scottish Landfill Tax (SLfT), and the devolved Social Security benefits.

These BGAs show the direction of travel since the last OBR forecast at the Autumn Budget, but the true impact on Scotland’s finances will not be clear until the Scottish Fiscal Commission (SFC) next publish their forecasts for tax revenue and social security benefits expenditure in Scotland, which will be outlined in the Scottish Government’s Medium-Term Financial Strategy 2025.

On 18 March, the UK Government (UKG) published its Green Paper “Pathways to Work”, outlining reforms to the UKG welfare system. Included in these reforms is a change to eligibility criteria for Personal Independence Payment (PIP) in England and Wales rolling out from November 2026. These changes will also impact eligibility for Carers Allowance in England and Wales. Both PIP and Carers Allowance have a BGA which is added to the Scottish Budget, meaning that UKG reforms which reduce spending on this benefit will reduce our funding. Annex B shows that the forecast BGA for PIP will reduce to £4,270 million from £4,650 million by 2029-30, since the UKG Autumn Budget 2024. The Carers Allowance BGA will reduce to £480 million from £529 million by 2029-30.

While these forecasts don’t impact on funding for the Scottish Budget 2025-26, they indicate a difficult fiscal position in future years as a result of UKG welfare reforms.

Scotland Act Implementation Report

The Scottish Government’s Ninth Report on the Implementation of the Scotland Act 2016 will be laid in the Scottish and UK Parliaments on Tuesday 20th May 2025.

This report will outline the work that has been conducted in relation to the implementation of fiscal provisions set out in the Scotland Act 2016 across the 2024-25 financial year. The UK Government will lay its version of the report in the Scottish and UK parliaments at the same time.

Please be aware that this Implementation Report only informs on Scotland Act 2016 powers and does not cover the Scotland Act 2012. This is because the requirement to update on implementation of 2012 Act powers ceased in 2022, in line with language in the 2012 Act. All provisions of the Scotland Act 2012 have also now come into force, save for consequential amendments in Schedule 2 relating to the Scottish rate of income tax.

While there is no statutory requirement to report on Scotland Act 2016 powers, as was the case for the 2012 Act, the Scottish Fiscal Framework states that both the Scottish and UK Government should provide an annual report on 2016 Act implementation.

My officials will be happy to answer any further questions you have.

Shona Robison

Annex A

Table A: Block Grant Adjustments - OBR forecasts March 2025 (£m)

Tax	2023-24	2024-25	2025-26	2026-27	2027-28	2028-29	2029-30
Income Tax	-16,468	-18,431	-19,879	-20,830	-21,614	-22,287	-23,107
LBTT	-526*	-614	-637	-773	-892	-1,010	-1,096
SLfT	-74*	-76	-60	-55	-35	-34	-36
Total Tax	-17,068	-19,120	-20,576	-21,657	-22,540	-23,331	-24,239

Social Security	2023-24	2024-25	2025-26	2026-27	2027-28	2028-29	2029-30
AA	648*	750	803	859	890	920	955
PIP	2,492*	2,980	3,271	3,608	3,787	3,982	4,270
DLA	845*	945	984	1,031	1,064	1,078	1,065
CA	355*	400	422	451	460	466	480
IIDS	82*	86	84	83	81	79	76
SDA	6*	6	5	5	4	3	3
CWP	5*	4	6	6	6	6	6
WFP	n/a*	30	30	29	28	28	28
Total SS	4,432	5,200	5,605	6,071	6,321	6,562	6,882

*indicates outturn data

All BGAs are calculated using the IPC method

Figures may not sum due to rounding

Annex B

Table B: Change in Social Security BGA forecasts from Autumn Budget 2024 to Spring Forecast 2025 (£m)

BGA change since Scottish Budget (£m)	2024-25	2025-26	2026-27	2027-28	2028-29	2029-30
BGA (Attendance Allowance)	750	803	859	890	920	955
Change in BGA from Scottish Budget 2025-26	9	20	39	39	42	45
BGA (Personal Independence Payment)	2,980	3,271	3,608	3,787	3,982	4,270
Change in BGA from Scottish Budget 2025-26	-4	-20	5	-145	-279	-380
BGA (Disability Living Allowance)	945	984	1,031	1,064	1,078	1,065
Change in BGA from Scottish Budget 2025-26	13	8	6	-5	-12	-24
BGA (Carer’s Allowance)	400	422	451	460	466	480
Change in BGA from Scottish Budget 2025-26	4	2	4	-15	-34	-49
BGA (Industrial Injuries Disablement Scheme)	86	84	83	81	79	76
Change in BGA from Scottish Budget 2025-26	0	0	1	0	0	0
BGA (Severe Disablement Allowance)	6	5	5	4	3	3
Change in BGA from Scottish Budget 2025-26	0	0	0	0	0	0
BGA (Cold Weather Payment)	4	6	6	6	6	6
Change in BGA from Scottish Budget 2025-26	-2	0	0	0	0	0
BGA (Winter Fuel Payment)	30	30	29	28	28	28
Change in BGA from Scottish Budget 2025-26	-2	-1	-1	-1	-1	-2
TOTAL BGAs	5,200	5,605	6,071	6,321	6,526	6,882
Change in BGA from Scottish Budget 2025-26	+18	+9	+53	-126	-284	-408